WASHINGTON-At night, when most people are asleep, Dan Akerson thinks about Rubik’s Cubes. Relating the colors and squares on the device to possible marketing strategies, he toys with going beyond the colored surfaces and into the deeper relationships that connect the pieces.
The new chairman and chief executive officer who joined the country’s largest enhanced specialized mobile radio services provider last March has been devoting much of his time to moving Nextel Communications Inc.’s analog customers onto the company’s next-generation digital network. The effort has been quiet, but intense, a switch from the splash the company-then known as Fleet Call-made several years ago when it first entered the marketplace. With more than 160,000 digital subscribers now online nationwide, Akerson and his team are moving ahead with market tests that will target non-traditional SMR users in six major venues. But Akerson wants to walk before he runs.
Nextel’s recent move to upgrade its less-than-satisfactory Motorola Integrated Radio System with the manufacturer’s new iDEN system gives the carrier a number of new offerings that could attract subscribers who never thought of using ESMR services before. Its voice and data capabilities at least rival those of cellular, Akerson believes; built-in messaging could take a bite out of Sprint Spectrum L.P.’s nascent personal communications services head start in at least one market. According to Akerson, the iDEN system, coupled with technology overlays, can offer “all the features and functions of PCS.”
While the old push at Nextel was acquisition, acquisition, acquisition, the new mantra is marketing, marketing, marketing.
It could be said that Nextel’s marketing strategy, at least at the onset, includes choosing new customers almost by hand; incumbents-original Nextel/Fleet Call subscribers along with those garnered as a result of acquisition-are being treated with kid gloves. “We are being very careful not to say that a new day has dawned,” Akerson told RCR in an exclusive interview. “First, we will phase in the [analog] acquisition customers to digital, and then we will send out a mailer to new prospects. So far, our churn rate has been very low, less than 1 percent.”
Akerson added that Nextel is “deliberately trying to be fair” during the dual transition process-from analog to digital and from acquisition customer to Nextel subscriber. “The new subscribers really don’t think about whether Nextel is better or not,” he said. “We are deliberately trying to be fair with them, and only a handful-fewer than 20-have had a problem with the shift to digital. In the end, if they don’t want to switch, we introduce them to one of our competitors.”
A direct sales force continues to work most major cities, and independent sales representatives handle between 15 percent and 35 percent of Nextel’s products. Reps tout Nextel’s instant conferencing feature to one set of potential users and its dispatch capabilities to others. Xerox and international air courier service Airborne Express are the first corporate accounts to turn to Nextel for their business radio needs, and Nextel would like to add others to the fold because of their potential nationwide presence and because they are early adopters, ready for new wireless applications. Nextel also wants to introduce its new services to wider audiences on a regional basis, at first.
“Because our services are so differentiated, we have to think about our approaches,” Akerson said. “High-end new customers with complex, regional mobile telecommunications needs will come to us. They find out that they can travel from Tom’s River, N.J., to Hartford, Conn., cheaper with Nextel than they can with traditional wireline services.”
Akerson continued, “Potential subscribers naturally are taking a wait-and-see attitude toward us, and there is not enough brand loyalty yet. We have to come up with a national branding strategy.” However, “I am hesitant to take a bold step forward until we have the best product and service,” he added. “We are running focus groups in Chicago [one test market], but we won’t be rolling out any nationwide advertising yet.”
He continued, “Advertising is an art as much as it is a science. We will advertise in local markets first, but probably not on television; we don’t know yet how TV would work for us, and we plan to go with distinctive magazine ads.”
In the short term, though, “we will build business demand before consumer demand,” Akerson said. “Ours will be an integrated process. While I’m not ready to talk about long-range plans, I think Nextel will be in two or three dozen cities with our 3: 1 technology. We will be able to serve 85 percent of our pops by the end of 1998.” The Chicago test market currently boasts more than 2,000 customers, many of whom Akerson said “will pay a premium for no interference.”
Sometime in the future, Nextel is considering entering the long-distance resale market. Akerson estimated that the ESMR could sell such service to its subscribers for between 10 cents and 12 cents per minute. Going international is another goal, with Canada and Mexico natural firsts.
It doesn’t take long for people to realize that Akerson is a military man. A graduate of the U.S. Naval Academy, Akerson sprinkles his conversation with references to that past life, and he is glowing in his praise of such war heroes as retired Navy Admiral James Stockdale, a Hoover Institute Fellow, Medal of Honor winner and former prisoner of war. His straight-ahead demeanor is calculated to keep conversation partners on track and focused.
Coupled with his military training, an advanced degree in accounting and finance from the London School of Economics prepared Akerson for a number of corner-office positions prior to his decision to accept the challenge of taking a fast-growing ESMR operation from startup to the next level. Akerson spent time as a partner in Forstmann Little and as chief executive officer of General Instrument Corp.; as president and chief operating officer of MCI; with AT&T Corp.; and with Phillips Petroleum Co. Nextel and international telecom concern Cable and Wireless plc both vied for Akerson’s talents; he chose Nextel because it will “permit me to return to a role in which I am most comfortable-CEO of a company deploying advanced technologies.”
Akerson believes his “outsider” status will help him in his quest to move his company forward into the next generation of marketing and technological growth. Although he says they are “brighter than the average business person,” he also thinks that there shouldn’t be too much room at the top for lawyers and accountants. “It’s time for a change,” he said. “Morgan [O’Brien] and Brian [McAuley] have done a terrific job acquiring spectrum, but to run a high-tech company in a competitive business, it pays to have veterans. I think not having a wireless pedigree is a godsend. People are not suspicious of my motives because I have no allegiances.”
Rather than worrying about Nextel’s coming in behind the competitive power curve in any given market, Akerson relishes the challenge of going head to head with entrenched carriers. “The wireline business is just now going to see true competition, with six various competitors in each market. It’s just going to be more difficult [for them] during the next 10 years.”
